Mr. KNIGHT. There were two of them, one predicated on the former proposal, I believe dated October 30; and I believe the latest one is January 6, their letter dated January 6.

Do you want that date for sure? I quoted that from memory.
Mr. BROOKS. We have a copy of it.

Mr. Jay, a couple of weeks prior to Mr. Burns' personal note complaining about Mr. Warren, these negotiated purchases of Henges partitions started being processed through GSA. You have heard the testimony that transpired yesterday. I would like to ask, for the record, if you knew that the Commodity Stabilization Service intented to install the partitions in the building wihout competitive bids?

Mr. JAY. I did not.

Mr. BROOKS. It is my understanding that Mr. Burns talked with you about it on about August 17; is that correct?

Mr. JAY. That is not.

Mr. BROOKS. After the Commodity Stabilization Service counsel refused to approve this procedure of breaking the job down on three requisitions, in amounts of less than $2,500, were you informed of that immediately?

Mr. JAY. Sir, that was rather long. I am not sure that I followed you.

Mr. BROOKS. The Commodity Stabilization's counsel refused to approve their procedure of breaking this job down into three jobs, all being less than $2,500 limit. I wonder if you were informed of that. Mr. JAY. This is the first I have heard about that, sir.

Mr. BROOKS. Did you know that the job order was being processed through the GSA to pay for the work on the area manager's negotiating authority, that is your Mr. Collins?

Mr. JAY. I did not.

Mr. BROOKS. Isn't Mr. Lund responsible for keeping you informed on activities in his division?

Mr. JAY. He certainly is.

Mr. BROOKS. Did he tell you of Mr. Collins' call prior to September 8 Mr. Collins talked with him between September 1 and September 8 on this rather unusual situation.

The question is, did Mr. Lund notify you of that call and the problem?

Mr. JAY. Mr. Lund and I, and other directors, have a lot of conferences daily. I can't say he did or didn't. To the best of my knowledge, Mr. Chairman, the first I ever heard about the partitions at the Commodity Stabilization was when my comptroller brought to me invoices which had been approved for payment over the area manager's authority. That was the first I ever knew. If you ask me if I knew there were going to be partitions in the building, I would say I would know there were going to be partitions in any building. I recall that at an earlier date Mr. Gene Moran and Mr. Henges, or Mr. Burns, had been in my office on partition matters, and I took them to one of the buyers in the Federal Supply Service who would ordinarily show them what we have in stock items. I knew nothing else after that. And it would ordinarily not be brought to my attention. They only bring me the trouble spots.

Mr. BROOKS. I gather from all that has been said, though, that you do take full responsibility for the decision to advertise for competitive bids on this job when it finally came up to you.

Mr. JAY. Yes, sir; I do.

Mr. BROOKS. I can sort of understand your unhappiness with Mr. Warren when he refused to sign the contract and thereby questioned your own judgment, the legality of your action. But what I didn't understand was why you didn't consult your own counsel before you made that firm decision, which apparently there was some question about?

Mr. JAY. Yes, I guess, looking back, I probably would have consulted with him now. I didn't see I thought, in advertising, Mr. Chairman, we were providing the one element that was missing, and that was competition. And inasmuch as the partitions were there and were being used in a-could I paint this picture: We have a building of blank size, and we decide to enlarge it, a 100-percent enlargement, almost. They cut the center wall out. As I understand it, this man is putting partitions over on this side, and some way he starts putting partitions over on this side. It is brought to our attention that they are not properly contracted for.

It seemed to me that to meet our requirement so that the charge of not advertising and giving somebody favoritism, the best thing to do was to advertise for them, knowing full well that if he was not low he could be he would be out the loss of dismantling them and taking them out. The partitions were not permanent, as far as I could tell.

Mr. Chairman, may I-perhaps you would like for the record pictures of these partitions, showing the way they are put together and the way they can be dismounted, that they are not fixed.

Mr. BROOKS. That would be helpful. I would appreciate it.

Mr. JAY. I would be very happy to furnish them to Mr. Moore, with particular emphasis that they can be lifted, and this is the way they are disassembled [handing pictures to Mr. Moore].

Mr. BROOKS. I am glad to see you are still calling them partitions, which is the way they were advertised. Mr. Lund has a great interest in cubicles. He is a steam bath advocate, or something.

Mr. JAY. May I say for the record that I am informed-I was subsequently informed that they number these partitions out there, and then change them around interchangeably to provide larger areas or smaller areas. The question that some of my people have brought up is whether or not it is furniture, or real property, or personal property. That isn't my determination. I will let the legal beavers tell us what is proper there. I don't know about that.

Mr. BROOKS. I am inclined to agree with you that it might have been a good idea to check with your counsel before you

Mr. JAY. Before we went ahead with these plans? Yes, sir. I am sorry I didn't.

Mr. BROOKS. I don't think that that is what he is for. The Government pays him to advise you.

Mr. JAY. And he provides me with able service.

Mr. BROOKS. You don't have to follow his opinion. You can disagree with him.

Mr. JAY. He provides me very able service and I am sure he would testify that I ordinarily route everything, and have directed that everything be routed through his office.

Mr. BROOKS. When you called Mr. Pines of the GSA-Samuel Pines of GSA, out to ask his opinion, did you explain the full circumstances to him? And he still agreed not to audit the file?

Mr. JAY. Mr. Chairman, words are-I am going to try to explain it in the way that it happened in the words that I remember it. Mr. BROOKS. That we would like to have. Just the way it happened.

Mr. JAY. It may mean something else. I am not a lawyer.

I did not call Mr. Pines. Mr. Pines was in my office-I beg your pardon?

Mr. BROOKS. I am just listening.

Mr. JAY. I did not call Mr. Pines. Mr. Pines had called me the day before, and told me that he was going to conduct what we call an exit interview on the completion of a survey of a certain part of my shop, which is a routine procedure. He comes in, visits with me about the things that we-what we are doing wrong and what we are doing right, and makes suggestions, prior to his writing his formal report.

He gets the regional feeling, because some of these things have two sides to them. Some of these questions have two sides and he wants the operating viewpoint before he writes his report. He then writes it as that..

I told I asked Mr. Pines about this situation. Of course, the first thing he told me was that he couldn't give an official opinion, or an unofficial opinion; and still relying on my personal friendship with Mr. Pines, I said, "Let me tell you what happened," and I gave him the information as I had it at that time, and based on that he gave me the personal opinion that the proper thing to do would be to document this occurrence in the file, and that that would be sufficient.

Mr. Pines did not tell me that GAO would not audit such a transaction. He never made such a statement to me. He

gave me his personal opinion or advice that the proper thing to do was to fully document it, a cover letter, and put it in the file. That was the extent of Mr. Pines' statements. And he didn't indicate to me that GAO was giving us a whitewash or anything like that. He doesn't do that.

And that is the best way I reported it when we had the meeting with Mr. Horn Bostel, Mr. Stacy, and Mr. Lund.

Mr. BROOKS. Did he assure you that if there was a covering memo that he, Mr. Pines, would not look at it?

He

Mr. JAY. Not look at it? I wouldn't say that he assured me. gave me his personal opinion that if the facts were as I had stated them, and with the covering memo, he would not ordinarily look further into that transaction, into such a transaction. If any facts are different, of course, it is implied that he would.

Mr. BROOKS. Did you consider Mr. Lund's memo as adequate? To meet that specification?

Mr. JAY. Without reading it again, sir, I would say "Yes." At least, I haven't objected to his memo.1

1 See appendix, exhibit 12, for letter of Apr. 7, 1960, from Hon. Joseph Campbell, Comptroller General of the United States, to Hon. Jack Brooks, with accompanying statements from Mr. Sam Pines and Mr. Jack G. Laughlin, GAO, Kansas City representative.

Mr. BROOKS. Are you familiar with section 302-C of the Federal Property and Administrative Services Act of 1949? 302-C?

Mr. JAY. I am certainly not.

Mr. BROOKS. That is the one you operate on.

Mr. JAY. I have a real nice staff that tries to keep me up on these regulations.

Mr. BROOKS. It provides that all purchases and contracts for property and service shall be made by advertising, except that such purchases and contracts may be negotiated by the agency head without advertising if public exigency will not admit of the delay incident to advertising, or the aggregate amount involved does not exceed $2,500 [handing to Mr. Jay].

These were the only two provisions in that section open to you and to the Commodity Stabilization Service for not advertising in this situation.

Mr. JAY. I see that now, sir.

Mr. BROOKS. Apparently there wasn't any emergency.

Mr. JAY. None at all.

Mr. BROOKS. You had no emergency about partitions. You could put the desk in, you could operate. Some offices have a new policy, I understand, of operating without a lot of partitions, which break up. Mr. JAY. There was never a question of emergency on it, sir.

Mr. BROOKS. As I recall, our subcommittee amended the provision in the last Congress to raise that maximum from $1,000 to $2,500, at which time we gave pretty careful consideration to the possibility of abuses that could result from increasing the limit on negotiated sales or purchases. And it seemed quite apparent that the attempt to secure payment for partitions under these provisions, not only was an attempt to violate the letter of the law, but it is definitely contrary to the purpose for which the legislation was enacted. It was enacted to expedite legitimate purchase under $2,500, not to make it easier to break down a $6,000 purchase into two or three under $2,500. We were aware of that. I asked them about that at the time. We were concerned about it.

par

I said if they take a $10,000 deal that they want to sell to some favored friend-I didn't even know you, never had heard of this ticular office they could sell it and they could buy it by negotiated purchase and break it down into $2,400 or $2,000, and buy innumerable items, making a pretty good sized total, as a real possible danger. They said, Oh, no; that will never happen. We won't let that happen.

I can see that it looks to me like it is something we ought to watch a good bit more closely.

Mr. JAY. I certainly wasn't intending to evade any laws or to violate any laws, sir.

Mr. BROOKS. But you can see what the possibility is. You are not making these sales or purchases.

Mr. JAY. I am concerned with the policy.

Mr. BROOKS. But your problem is one which your own people apparently are not as well aware of as they could be.

Mr. JAY. It is going to be brought to their attention again.

Mr. BROOKS. It is pretty evident that this partition work involved well in excess of $2,500, the authority to negotiate did not exist, and

it would have been paid. It is really a violation, if your comptroller hadn't stopped it.

I think Mr. Floete would agree that the intent of Congress was certainly not to provide an easier method for covering up blunders and possible favoritism, as it looked like happened in this instance.

I think that the fact that the approved job order itself and the invoice, were submitted to your comptroller leads to this conclusion, unless we want to impute that they just didn't know what they were doing. They have all been with GSA a long time. Most of these people involved have had a good bit of experience, more than I have, probably more than you have.

The decision to cloak it with respectability by having this advertisement for the job and the "notice to proceed," and to go through that formula, when the job had already been done, was something that was just a red flag to me, as far as calling it legitimate bidding procedure, and the fact that you were going to advertise it was desirable. But it seemed to me that a much better system wold have been to follow what I knew-I knew this was possible, but your attorney investigated it-to go by quantrum merit, and point out what had happened, let them send it to the comptroller, explain what the circumstances and facts were, and they would have ended up paying those people. We could have settled it without going through that area manager's authority or advertising. You have to admit it was not really a legitimate advertising procedure.

Mr. JAY. No, I won't admit it wasn't a legitimate procedure. I will admit that from the testimony here there could be some question raised as to why were we doing such a silly thing.

Mr. BROOKS. That's right.

Mr. JAY. But there was no effort made, Mr. Chairman, to cloak it. It was hidden from nobody. Everybody in our shop, my top staff, as it got to their progressive level, was made aware of it. Our regional counsel testified yesterday that I advised him that I invited him to write our Counsel General for an opinion. The thing has still not been paid, sir.

Mr. BROOKS. I didn't plan to ask, but since you mentioned it, he stated that you said that you could write to him, but that you weren't interested in his opinion. I thought that you might want to clarify that statement.

Mr. JAY. I certainly would. Again I think there is a misconstruction. I don't think it was intentional on Mr. Horn Bostel's part.

I know myself well enough to know that I would never make a statement that I was not interested in the opinion of a general counsel, comptroller general, or whatever it might be. I bow very deeply to those men. If I made any such remark it was in the air that if this matter was not one of legal ruling, if it was an administrative determination, that I was prepared to stand on the administrative determination and we wouldn't need counsel's opinion. In that area—there are many areas in our business that call for a legal determination and then offers that call for administrative determination. That was the text of that remark, and nothing else was imputed.

I am sure Mr. HornBostel didn't take it that way, because I counteracted it, sir, by saying, "Mr. HornBostel, feel perfectly free to go to the General Counsel and get his opinion on it."